It’s only a matter of time before solid-state drives, also known as “flash” drives, boot hard-disk drives out of the computer market, stock analysts say. Thus, your clients should bet on technology manufacturers who hold the intellectual property rights to SSDs, as these companies are the best poised in their sector to profit from the upgrade.

Unlike HDDs, which use a spinning disk to store data, SSDs don’t have any moving mechanical parts. Instead, they store data in a flash-memory chip on a stationary circuit board. Although the use of SSDs as a way to store data has only recently become more widespread — they are now used in consumer gadgets such as portable media players and smartphones — flash-style memory has been around since the 1990s.

Increased reliability, better performance and less energy consumption are the main reasons SSDs are poised to wipe out HDDs as the main storage medium, says Jeff Janukowicz, a research manager of HDD components and SSDs in New Jersey with Framingham, Mass.-based technology research firm International Data Corp.

“You are getting much faster access to data because you don’t have to wait for a disk to spin around like in a hard drive,” says Janukowicz. “Since there are no mechanical or moving parts, [flash memory] is inherently more reliable.”

That is the main reason why you can still access your files if your SSD crashes. HDDs, as most everyone knows, don’t often afford such a luxury, says Roger Kay, president of Wayland, Mass.-based computer analysis firm Endpoint Technologies Associates Inc.

HDDs have dominated the data-storage market for one main reason — price. “If there is one thing hard drives do really well,” Janukowicz says, “it’s providing high-capacity storage at rock-bottom prices.”

For a PC, the price differential between HDDs and SSDs can be several hundred to thousands of dollars. Although PCs have the same fixed costs for circuit boards and other components, the price differential begins to vary with the more flash-memory chips you add to an SSD.

At small sizes, the cost for flash-memory chips is relatively inexpensive. This is why SSDs have recently come to dominate storage in consumer gadgets such as smartphones and digital cameras, which have smaller memory requirements, Kay says: “It’s only a matter of time before the same thing happens to computers.”

SSDs will begin to take hold in consumer computers in 2011, Janukowicz says: “Not until then will SSDs be more cost-competitive in the PC segment. [But] at first, we will see them being implemented in the corporate environment.”

Currently, the energy costs companies endure to store their information can be monumental, as information is kept on racks of HDDs, which require significant levels of electricity to run and cool. “The [energy] savings of replacing those drives with SSDs,” says Janukowicz, “will be generous.”

As SSDs trickle into the consumer computer markets, they will first be offered as premium alternatives to HDD-based computers. For example, Cupertino, Calif.-based Apple Inc. currently offers a choice between a 120-gigabyte HDD or a 128-GB SSD in its 13.3-inch MacBook Air. The notebook computer with the SSD costs an extra $300.

As SSDs become the main method of storing data, Janukowicz predicts that the SSD market will grow to more than US$5 billion in revenue worldwide by Dec. 31, 2013. He expects revenue for SSDs in 2009 to total US$900 million. That’s relatively small in comparison with the HDD market. IDC had calculated that HDDs generated US$30 billion in sales worldwide for the year ended Dec. 31, 2008.

So, if you want to help your clients cash in on SSDs before they become widespread, Kay says, you’ll want to have a look at companies that already manufacture flash-memory chips.

A manufacturer such as South Korea-based Samsung Electronics Co. Ltd., which owns the intellectual property rights to its flash-memory chips, is able to keep its SSD products priced competitively.

Samsung, a major producer of consumer and business electronic goods, pulled in 39.6 trillion South Korean won (US$29.4 billion) in revenue for the six months ended June 30, a 12% increase from the 35.3 trillion won it generated during the same period in 2008. Its net income for the 2009 six-month period dropped to 2.9 trillion won (US$2.1 billion) from $4.3 trillion won in the same period the year before, due to losses in Samsung’s semiconductor business. Its stock currently trades on the Seoul Stock Exchange and on the London Stock Exchange in the form of global depository receipts. (See chart, above, for GDRs.)

@page_break@Another SSD producer to watch out for is Santa Clara, Calif.-based Intel Corp. , which manufactures several SSDs for notebooks and PCs; it also owns several patents on flash memory. The firm currently manufacturers SSDs available in two sizes, 2.5 inches or 1.8 inches. Intel recently partnered with Boise, Idaho-based Micron Technology Inc. to create IM Flash Technologies, an ultra-high-speed form of flash memory that allows for faster data transfer.

For the nine months ended Sept. 27, Intel, best known for manufacturing the processors found in most PCs, generated US$24.6 billion in revenue, compared with US$29.4 billion for the same period in 2008. Its net income was US$2.1 billion in the nine months this year, down from US$5.1 billion a year prior.

Milpitas, Calif.-based SanDisk Corp. also specializes in designing and developing various products using flash memory, including SSDs. Revenue remained flat at US$2 billion for the nine months ended Sept. 27, compared with the same period in 2008. However, its net income jumped dramatically this year to $75.8 million for the nine months from a loss of $228.7 million a year prior because of increased sales of flash-memory cards to its mobile customers.

Outside of these players, some HDD manufacturers will be trying to break into the SSD business by buying memory chips from suppliers such as Samsung and Intel and then creating their own drives.

However, Kay suggests, that strategy would create a competitive disadvantage, as buying the chips from suppliers rather than manufacturing them themselves will cut into their profit margins.

“It’s difficult to see how they will make money by swinging their businesses over from HDDs to SSDs,” he says “Why would I [invest in such companies], when Samsung can aggressively price its SSDs and still make money from the intellectual property?” IE